South Of The Border
Hilton Continues Ramping Up Distribution In Mexico With Nine New Deals
Wednesday, February 15, 2017
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There’s no denying that Latin America represents a critical component to any U.S. company’s global expansion strategy, which is why Hilton is particularly bullish about its ramped-up presence in Mexico thanks to a spate of recent signings.
The McLean, VA-based multi-branded company recently announced the signing of 9 properties and nearly 1,200 rooms in Mexico representing a handful of Hilton brands. Following the opening of seven hotels last year, Hilton’s portfolio in Mexico currently stands at 48 hotels, which represents close to half of the company’s roughly 100 properties in Latin America.
Juan Corvinos, managing director, development, Mexico, Central America and the Hispanic Caribbean, Hilton, touted the company’s development prospects south of the border. “It’s our biggest market in Latin America by number of hotels and by number of pipeline hotels. Then you mix into that the proximity to the U.S. The U.S. customer is very comfortable traveling there; European travelers are very comfortable traveling there. The New York Times made Mexico City the number one place to go in 2016. Los Cabos was named number one by TripAdvisor with its Travelers’ Choice Awards last year. People are traveling with the Internet before traveling physically so it makes for a great cocktail to develop our brands,” he said.
Three of the nine new properties will be part of the company’s original soft brand, Curio – A Collection by Hilton, including The Fives Downtown Hotel Playa del Carmen; 1970 Hotel Posadas Guadalajara; and Zacatecas Centro Historico. The latter property will undergo interior renovations prior to its anticipated opening in early 2018.
The company’s limited-service Hilton Garden Inn brand will be adding properties in Merida; Mexico City Santa Fe; in addition to a dual-branded Hilton Garden Inn and Homewood Suites in Saltillo. The Merida and Mexico City properties are both scheduled to open in 2017, while the dual-branded hotel is expected to open in late 2019.
The Hilton Guadalajara Midtown and the Hampton Inn by Hilton Cancun, expected to open Q1 2018 and Q2 2017, respectively, round out the new additions.
Corvinos noted many of the company’s long-standing relationships have netted a good portion of the new deals. “Last year we had about 35 new hotels in development in Latin America and 72 percent were with existing owners. So we’ve got a very robust database of loyal owners that want to keep developing with us,” she said.
Corvinos added the company is benefiting from the fact that it has been developing in Mexico for some 40 years. “Historically we’ve been in Mexico for a long time and we launched our focused-service brands around 20 years ago. So they [consumers] know our brands and all of our brands are now affiliated with the ‘by Hilton’ name in some way or manner, which has been a great recognition [tool] for us. Mexican and international travelers love going to a place and having that reassurance that there’s a brand behind it,” she said, stressing the company’s objective to “be what’s driving that booking decision.”
Corvinos elaborated on the importance of brand. “If you think about the U.S. more than 90 percent of the supply is branded. In Mexico you take the number and it’s down in the 20’s or lower. There are a lot of local players that are not associated with international brands, so it just calls for opportunity. There’s great opportunity for us to go and reposition assets with an appropriate PIP (property improvement plan), but there’s also ground-up development that’s been very successful,” she said, noting that all but one of the nine new properties will be new builds.
From an economic standpoint, things are looking up for Mexico as well. Corvinos pointed out that the nation has generated some $13 billion from international tourism last year, an increase of 9.3 percent from the previous year.
“I think this year we’re going to see an increase in tourism arrivals,” said Corvinos, who added she is equally bullish on the entire Latin America region. “I think opportunity is Latin America right now. As cap rates in the U.S. keep increasing I think people are starting to turn their attention to Latin America in general. I hope that we continue seeing the same trend and I don’t see any reason why we shouldn’t,” she said.